The Cost of Overlooking Senior Employees: High
Is age a determinant of competitive advantage?
Depends on which side of the spectrum you are. If lower than 40s, you have an edge; if higher, then probably the clock of relevance in your organization is ticking.
Unfortunately, this is what it is increasingly coming to be – equating age with capability. Rising agism at the workplace is one of the most daunting challenges that organizations are hurtling toward, blissfully unaware of its implications. Research by AARP, a US-based nonprofit and nonpartisan organization dedicated to empowering people 50 and above, and helping them leada life of their choice, shows that over 65% of workers in the age group of 45-74 have faced age-based discrimination at workplace. As for organizations, more than 60% believe age and competitive advantage don’t go hand in hand.
This is not all – there’s even more alarming data.
According to research by Statista, the median age of the labor force globally stood at 38.9 years and, by 2025, it is expected to rise to just about 39.6 years.In the US, the employment rate of workers aged 55 and above decreased to 36.4%in 2020 from nearly 40% in 2019, whereas that of young adults (age 16-24) touched 45.9%. Estimates provided by the US Bureau of Labor Statistics show that the average median age of the workforce will rise from 39.3 in 2000 to just about 42.8 in 2030.
Why do some companies overlook senior employees?
Growing agism is a gift of the pandemic. As organizations felt that older workers were more susceptible to the virus, resulting in rendering this section of the workforce redundant. With employer and HR focus increasingly turning to younger employees, the so-called older segment also began to find it difficult to continue their careers in new organizations.
Women especially have been at the receiving end with organizations taking a sexist approach in assuming a decline in energy and capability with age.
Another factor is the surge in digitization across operations and functions. As consumers get increasingly dependent on service at their fingertips and building efficiency in processes in the workplace becomes the top priority, the demand for digitalized services and automation has risen. Naturally, companies have taken to trimming their workforce, preferring younger employees over older ones.The underlying assumption here is that younger employees can pick up skills relatively faster.
What is the cost of overlooking senior workers?
High.
To begin with, there is the demographic cost organizations can ill-afford to ignore. The overall workforce is aging fast, in the US as well as globally. Going by estimates provided by the US Census Bureau, as America greys, the number of adults will outnumber children by 2035–the middle-age group anyway outnumbers children. In fact, globally too, this trend is more or less the same. While this is largely due to the increase in life expectancy and decline in fertility rates, it will pose questions about productivity and economic growth. Especially in the US, for example, job-related vacancies have surpassed applicants since 2018. Here, the situation is aggravated by the comparatively high rate of baby boomers reaching retirement vis-à-vis millennials stepping into take their place.
Given the kind of institutional knowledge and expertise mid-career workers or senior employees have, as well as considering the data pointing to living longer,it will cost organizations dearly to ignore the resource as these are seasoned professionals, some even veteran in their field of work.
With their experience and background of knowledge, they can add significant value to organizations by effectively mentoring and guiding the younger staff, improving productivity, and enhancing workplace loyalty. Also, mid-career/senior employees are high-retention employees. Given their background, they should rather be seen as key contributors.
Plus, there are several other high costs associated with losing a well-trained and knowledgeable employee – recruitment and training of replacements are both time-consuming and expensive, besides the exit of a senior employee has a negative impact on morale and revenues. All in all, there is a loss of institutional knowledge that accompanies such an exit. As the digital workforce grows, institutional knowledge will be less valuable because the knowledge is captured and living in the cloud. But, today, it still lives in senior employees’ heads. Moreover, having employees from all age groups in an organization makes the case for diversity and inclusion.
The financial implications of age-related biases for the employee can be drastic, especially with retirement in mind. Research by ProPublica and the Urban Institute shows that over 50% of older workers in the US are unwillingly pushed toward retirement, compelled to leave their jobs. The resultant financial damage is not just severe but also often irreversible, as these workers are not likely to be re-employed compared to the younger ones.
There are multiple real-life examples to show that age is no (or a minimal) criterion for success. Some of the most prominent names in the industry, irrespective of their age, still don the top executive roles: Warren Buffett, aged 91, CEO of Berkshire Hathaway; Frederick Smith, 77, Founder & CEO of Fedex; and Michael Bloomberg, 80, CEO of Bloomberg L.P. are leading examples. On the other hand, there are people like Robin Chase, who co-founded Zipcar in 2000, at 42 years of age.
Studies establish that the longer the tenure of people, the more successful they are at senior leadership or CXO levels. The reason is that success at senior or mid-career roles comes from their ability to work in collaboration, from having a better understanding of the business, and above all, from the wisdom that comes with experience and age.
Companies, therefore, stand to gain a lot from their senior workers or employees in terms of value and competence.
What must companies do to address agism?
Change the mindset and approach: The onus of change in any organization lies with leadership. The focus should be on not just hiring senior employees but also retaining. It is important to understand the performance demography-wise. Based on this assessment, a case should be made for age diversity in hiring, and leadership must ensure the message reaches the hiring managers.
Coaching hiring managers is an effective way to sensitize them. It helps in tackling implicit biases and ensuring the perceptions are filtered out from the hiring process.
Similarly, the hiring process, right from the time of posting jobs, can be streamlined.
Build clear protocols for senior employees: Often after a company takeover or acquisition, or even after any upheaval in business, there is a fear among senior employees that they will be the first to be retrenched. Leadership or top executives need to build proper processes and clearly communicate that, instead of age, behavior or ethics would be the primary determinant in ensuring continuity at the workplace.
This goes a long way in reassuring senior employees.
Tailor-make financial component to suit the requirement of senior employees: While offering packages and benefits, the senior employees could be given the option to choose from increased 401k match, corporate fitness program, or travel awards, etc, in line with their preference.
Include age diversity in the DEI initiative: The aim should be to build teams that are diverse in composition by age. Such teams are broad-based from the perspective of temperament and thinking, and more stable. Therefore, performance too is optimum.
Welcome back older employees. Returnship is also making way gradually at organizations. Therefore, it will help in having effective returnship programs for the senior employees to bring them back to work. There are several benefits of these programs: they help the senior employees pick up new skills, transition smoothly to full-time roles, and provide a support system.
Send the right message to the younger employees: Coaching and training sessions for the younger workers, where they can learn how to cooperate and collaborate with their senior counterparts, are again very helpful. These sessions facilitate bonding as both groups get to learn from each other.
What about agism at leadership level?
To say that age-related bias does not exist at the senior leadership level would be incorrect. It does: rather, at this level, it is more complex. According to some studies, age is a bigger discriminating factor in certain C-suite roles compared to others. Conversely, it is also at times a requirement at the C-level (i.e., 30+ years of experience).
From an organization’s perspective, one way to address this is to hire the services of an executive search firm–a firm that judiciously values experience and age in zeroing in on the right candidate; one that is not biased in favor of younger candidates. Such firms are led by leaders with sound experience and employ sustainable D&I strategies for acquiring and developing diverse leaders.
From the candidate’s perspective, the focus should be on projecting their skills and experience that will serve as a differentiating factor. Especially older candidates should work more to display how they are up to speed with current trends, the value that they can bring, the energy they can add, and their capability to strategically understand the positioning of the organization they are pitching for.
Also, it is equally important for existing leaders to have some kind of succession planning in mind, such as how to pass on the legacy and ensure a smooth transition, so that when the time comes to move on, it is not an unpleasant surprise.
To conclude
As the macroeconomic environment changes and the global economy evolves, diversity and inclusion are increasingly taking the center stage. Agism is a key deterrent to building a diverse and inclusive workplace. As an organization that is looking to thrive and resonate with the new generation workforce and communicate responsibly with its audience, you cannot be seen as harboring any kind of bias as that will be detrimental to your business. As part of organizational ethics, it is important that you treat all employees equally. This is not to say that you may not have to let go of people if business dynamics demand that. What is important is how you treat them even when doing that.
By being inclusive and fair-minded – whether hiring, retaining or relieving– you will send out the right message to your broader audience. Above all, you will create a workplace that is diverse and engaging.